Taxman targets dodgy deductions for work-related car expenses
MILLIONS of workers who claim tax deductions for car expenses are in the Australian Taxation Office’s firing line this year as it targets incorrect claims.
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MILLIONS of workers who claim tax deductions for car expenses are in the Australian Taxation Office’s headlights this year as it cracks down on dodgy claims.
The ATO has announced it is keeping a closer eye on work-related car expenses after more than 3.75 million people claimed about $8.8 billion last financial year.
“We are seeing a lot of mistakes,” said ATO assistant commissioner Kath Anderson. “Taxpayers are either making mistakes or deliberately over-claiming work-related car expenses.”
“We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed,” Ms Anderson said.
ATO data shows that since 2011, an extra 500,000 people have been claiming work-related car expenses with an average claim size around $2500.
It shows that 90 per cent of taxpayers use the cents per kilometre method for tax deductions. This allows a claim of 66c per km — without using a logbook -for up to 5000km in a year, but the ATO is concerned that 870,000 people are claiming the maximum 5000km and some may wrongly think this is allowed as a standard deduction.
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“You still need to have done the kilometres as part of your job and be able to show how you calculated your claim. The cents per kilometre method is there to simplify record keeping, not to provide a free ride,” Ms Anderson said.
“We are getting much better with our technology and our data. It compares taxpayers to their peers in similar occupations earning similar incomes, and we can identify people whose claims seem unusual.”
Fraudulent logbooks have had claims made by people even though they were overseas at the time.
H & R Block director of tax communications Mark Chapman said the penalties for incorrect claims could be “quite expensive”.
“You can be looking at anywhere between a 25 per cent penalty on the tax you underpaid up to 75 per cent, depending on whether it was a genuine mistake or more deliberate,” he said. Interest charges are on top of this, and currently set at 8.77 per cent.
Mr Chapman said a logbook should cover 12 weeks of car use, but only needed to be done every five years if your circumstances stayed the same.
He said the increase in deductions reflected a more mobile workforce. “People are required to travel more for work and travel between sites, and you have got more people making claims.
“The rules are quite complex so it’s easy to make a mistake, which is why people tend to use an accountant.”
CAUGHT OUT
• A traffic supervisor claimed $11,000 in work-related car expenses with a logbook, but an investigation found the logbook wasn’t printed until the following year and the claim was fraudulent.
• A laboratory technician claimed $3300 but admitted it was for home-to-work travel, which is not allowed. His claim was reduced to zero and he was penalised.
• A manager claimed $3800 in deductions but an ATO investigation found that the lease and running costs were paid by the employer. All deductions were disallowed and a penalty applied.
Source: ATO